Non-Banking Financial Companies in India: Role in Economic Growth, Challenges and the Way Forward

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Financial intermediaries like non-banking financial companies (NBFCs) have a definite and very important role in the financial sector, particularly in a developing economy like India. NBFCs play an important role in promoting inclusive growth in the country, by catering to the diverse financial needs of bank excluded customers. Further, NBFCs often take lead role in providing innovative financial services to Micro, Small, and Medium Enterprises (MSMEs) most suitable to their business requirements. The NBFC sector has continuously played a critical role in encouraging growth of the Indian economy and hence needs to be nurtured appropriately. This research paper mainly highlights the role of NBFCs in promoting economic growth of India. It also sets forth various strengths, opportunities, challenges and problems faced by this sector and the way forward.

CRISIL (2011), Retail NBFCs: The shine is back, but will it last?. [Online] March 2011. Available from: http://www.crisil.com/RatingsSite/CRISIL-ratings_nbfccompendium_ mar11.pdf. [ Accessed: 12th August 2014]

Non-Banking Financial Companies in India: Role in Economic Growth, Challenges and the Way Forward

Authors

Abstract

Financial intermediaries like non-banking financial companies (NBFCs) have a definite and very important role in the financial sector, particularly in a developing economy like India. NBFCs play an important role in promoting inclusive growth in the country, by catering to the diverse financial needs of bank excluded customers. Further, NBFCs often take lead role in providing innovative financial services to Micro, Small, and Medium Enterprises (MSMEs) most suitable to their business requirements. The NBFC sector has continuously played a critical role in encouraging growth of the Indian economy and hence needs to be nurtured appropriately. This research paper mainly highlights the role of NBFCs in promoting economic growth of India. It also sets forth various strengths, opportunities, challenges and problems faced by this sector and the way forward.